Spousal Lifetime Access Trust
A Spousal Lifetime Access Trust is an Irrevocable Trust set up by one spouse for the other during his or her lifetime, meaning the donor spouse does not need to pass away for this Trust to be created, which is a stark difference between Spousal Lifetime Access Trusts and other types of marital Trusts that are only established upon death. While the donor spouse makes an irrevocable gift to the Trust and gives up any right to the funds, the beneficiary spouse, and potentially other beneficiaries such as children and grandchildren, are provided access to the gifted funds right away.
Tax Avoidance & Benefits
A Spousal Lifetime Access Trust allows you to lock in the current, historic high exemption amounts. You transfer an amount up to your available gift tax exemption into the Spousal Lifetime Access Trust. Because the gift tax exemption is used, the value of the Spousal Lifetime Access Trust's assets is excluded from both your and your spouse’s gross estates. Your spouse may also execute a similar but not identical Spousal Lifetime Access Trust for your benefit. The Spousal Lifetime Access Trust allows the appreciation of the assets to escape federal estate taxation and, in most cases, the assets in the Spousal Lifetime Access Trust are generally protected from creditor claims. Because the Spousal Lifetime Access Trust provides protection against both federal estate taxation and creditor claims, it is a powerful wealth transfer vehicle that can be used to transfer wealth to multiple generations of beneficiaries.
Asset Protection For You & Your Spouse
Spousal Lifetime Access Trusts may also be useful for asset protection. Because you're putting the money into an Irrevocable Trust for somebody else’s benefit and giving up all control or use of the assets, it is no longer considered yours for attachment in either bankruptcy or litigation. Additionally, if structured properly, the assets may also be safe from your spouse’s creditors. Given the flexibility in Trust terms, a Spousal Lifetime Access Trust can also be combined with other types of Trusts.
At Politakis Law, we provide our clients with comprehensive estate planning support that’s personalized to suit their specific needs. We know that preparing for the future can be difficult and overwhelming, but when you turn to us, you can rest assured that we will offer professional, knowledgeable guidance to help you reach your goals. Ready to get started? Schedule your virtual or in-person consultation with Politakis Law today for estate planning & elder law assistance in Schererville.